Yellen says she got ‘wrong’ on inflation path, Biden backs Fed actions

U.S. Treasury Secretary Janet Yellen testifies during a U.S. House Financial Services Committee hearing on the Financial Stability Oversight Board’s annual report, on Capitol Hill in Washington, DC, USA United, May 12, 2022. Saul Loeb/Pool via REUTERS

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WASHINGTON, May 31 (Reuters) – U.S. Treasury Secretary Janet Yellen said on Tuesday she had been wrong in the past about the path inflation would take, but said bringing price rises under control was President Joe Biden’s top priority and that he supported the actions of the Federal Reserve to achieve it. this.

When asked in a CNN interview if she was wrong to downplay the threat inflation posed in public statements over the past year, Yellen said, “I think I was wrong then. on the path that inflation would take.”

“As I mentioned, there have been unforeseen and significant shocks to the economy that have driven up energy and food prices and supply bottlenecks that have severely affected our economy, which I didn’t fully understand at the time,” Yellen said, adding that shocks range from Russia’s invasion of Ukraine to China’s recent COVID-19 shutdowns.

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“So really, the shocks to the economy have continued, but inflation is President Biden’s main concern,” Yellen said.

Biden “firmly believes in and supports the independence of the Fed to take the necessary steps” to reduce inflation, Yellen added.

Biden met with Fed Chairman Jerome Powell earlier Tuesday and emphasized that he “respects the independence of the Federal Reserve,” a White House official said. Read more

Yellen said the Biden administration was taking steps to try to complement the Fed’s effort by reducing the cost of prescription drugs and health care and pushing proposals in Congress to boost the use of renewable energy.

While she said a recent drop in core inflation data was encouraging, she noted that oil prices remained high and Europe was working on a plan to ban Russian oil imports. .

“We cannot rule out further shocks,” Yellen said.

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Reporting by David Lawder and Costas Pitas; Editing by Leslie Adler

Our standards: The Thomson Reuters Trust Principles.

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